A classic case and one of the most memorable days of testimony concerned the United States Steel Corporation and its subsidiary, Carnegie-Illinois Steel. At issue was the quality of steel plate being produced for ships.
As frequently happened, the committee’s first hint of trouble came in letters from employees who felt it their patriotic duty to report what was going on. At first little was done. The volume of similar complaints and warnings from around the country had become too great to handle. Much of it was obviously crank mail and to follow every lead would have been impossible. But when a newly launched ship, a tanker called Schenectady built by Henry J. Kaiser, broke in two at Portland, Oregon, in January 1943, the question of steel plate became one of vital importance.
At the Irvin Works, the Carnegie-Illinois rolling mill at West Mifflin, Pennsylvania, investigators for the Truman Committee found that at least 5 percent of the plant’s production, or about 3,000 tons of steel per month, failed to meet Navy specifications, yet was being labeled and delivered as up to standard. The results of quality tests—chemical analysis conducted in the mill to determine the quantity of carbon and other elements in the steel—were simply altered (as were other tests for tensile strength) “to conform to what the customer expected to receive,” in the words of the chief specifications examiner, a man named Murray Stewart. If the chemical analysis of a “heat” of steel wasn’t known, he said, then they would just make one up for the record book.
Stewart was among the first to appear on the day of the hearing, March 23, 1943, and he provided some of the most damaging of all testimony, as well as a touch of unintended humor, when Hugh Fulton encouraged him to explain how exactly the system worked:
FULTON: In other words…you would make up a chemical analysis which you thought would fit what the steel should have been.
STEWART: That is right.
FULTON: And how would you deal with that in that particular record book?
STEWART: In order to keep our records so that we would know when it was an incorrect heat number, we would enter it in this book in pencil.
FULTON: How were the other entries made?
STEWART: They were made in ink.
FULTON: And did you, in addition to making them in pencil, put any prefix letter in front of them?
STEWART: It was a common practice to put an “F.”
FULTON: What did “F” mean?
STEWART: Fake.
FULTON: You told our investigator originally that it meant phone.
STEWART: That is right.
FULTON: But now under oath you desire to state it meant fake?
STEWART: That is correct. The investigator was a stranger to me and I was sort of pressed for something to say at the moment.
An assistant metallurgist, David B. Ireland, Jr., testified—apparently hoping to put operations at the Irvin mill in a better light—that he learned how to fake the tests at the Edgar Thomson Works, another giant Carnegie-Illinois mill near Pittsburgh. Indeed, he had become so proficient, said Ireland, that he could readily fool a Navy inspector, whenever one was on hand. To date only one tester had been caught cheating by a Navy inspector, Ireland continued, but there was an explanation for that: “He cheated more than he was supposed to cheat.”
Was the man fired, asked Senator Homer Ferguson. No, said Ireland, he was demoted. Was he demoted because he went too far, Chairman Truman asked a higher-ranking employee, chief metallurgist W. F. McGarrity.
“Yes, sir,” said McGarrity.
“Going a little too far, he was demoted,” repeated Truman. “He wasn’t fired, he was just demoted.”
“And through satisfactory work elsewhere he was brought back to a better paying job,” added McGarrity.
Three investigators from the committee had gone to the Irvin Works earlier in March, or roughly two months after the Schenectady incident. They had called first at the Carnegie-Illinois headquarters in Pittsburgh, where they were told by the president of the corporation, J. Lester Perry, that they could speak to no employee unless a company attorney were present. Nor would they be permitted inside the mill until he, Perry, put through a call to Senator Truman to see what this was all about, a move that infuriated Senator Truman and made him immediately suspicious that Perry was trying to hide something. When the investigators arrived at Irwin about noon they were kept waiting for half an hour, then invited to lunch at the company cafeteria. They did not want lunch, they said, they wanted to see the record book from the mill at once. But they were kept waiting another hour, and when the book was at last made available at two in the afternoon, they learned it had been taken apart the night before and distributed among several people who were “doing work” for the company attorney. Two hours had been required to put it back together again. How much had been removed or altered they had no way of knowing, wrote one of the investigators in his report to Chairman Truman.
“I don’t think that was exactly strong cooperation, Mr. Perry,” Truman said when Perry took his place at the witness table, after Stewart, Ireland, and McGarrity had all completed their testimony. “And I was also rather surprised…that you didn’t take immediate action to clean the plant and find why this procedure was followed. I want you to explain to the committee fully why that was.”
“Senator Truman, it is not my intention to explain this and to be controversial,” Perry answered smoothly.
“You can be as controversial as you like,” said Truman. “It is your privilege.”
He had never had any desire except to cooperate, Perry insisted. Perhaps he had not appreciated the full importance of the investigators’ visit, perhaps he should have done more. He had demonstrated goodwill, he thought. As he recalled, it was only late in the day when the seriousness of the situation became clear to him. “That afternoon, late, it appeared definitely that they wanted to make an investigation,” he said.
“We don’t send investigators to plants just for fun,” Truman snapped.
“I understand that now,” replied Perry.
Truman pressed him again on what action had been taken to straighten things out in the mill. Had anybody been fired? What corrections had been made? Trying first to evade the questions, Perry admitted that as yet nothing had been done. He needed time to get all the facts, “the fullest implications.” Truman found that unacceptable. If he had been president of the company, he said, he would have gotten to the bottom of the situation at once. “You had all this information as soon as our investigators had it.”
It was Perry’s position, as expressed in a prepared statement and in the course of testimony, that while management deplored such devious practices as had been disclosed by the committee’s investigators—practices that higher management had no part in—even the substandard plates supplied by the mill were “entirely suitable for their intended use.” If the Navy was not getting what it ordered exactly, what it was getting was good enough for the purpose. “The only explanation which can be given for the failure to carry out prescribed testing procedures is that a few individuals…grew lax under the pressure of heavy production….” He found the word “cheat” as used in other testimony unacceptable. He preferred “misrepresentation.”
Most important, concerning the Schenectady, he said that failure of steel plate in the ship had not been the cause of its breakup and even if that were the problem, the plate at the point where the break began was not a product of the Irvin Works.
Of the senators present, it was Ferguson and Brewster, the two Republicans, who bore down hardest on Perry, while Fulton or Truman would move in with a question or comment from time to time. Ferguson picked up quickly on the question of where the Schenectady plate had been made. It was not made at Irvin, Perry affirmed again. Then where, asked Ferguson. Homestead, admitted Perry.
“Didn’t you hear the witness testify here that he was taught how to cheat down at the Homestead Works?” Ferguson asked.
“Senator, this word ‘cheat’…”
“Have you a better o
ne?”
Senator Brewster then read aloud from the report of an investigation conducted by the Bureau of Ships, stating quite plainly that “a very poor quality of steel” had been “most directly responsible” for the failure of the Schenectady. The plate was “of definitely inferior quality,” Brewster read on. It was so brittle it was more like cast iron than steel.
Had Perry read the report? He had read parts of it, he replied. Brewster, his anger becoming more apparent, wondered how Perry might feel if he had a son going overseas in a ship made of such steel.
Perry answered, “Why, Senator, I don’t for a moment condone poor steel, defective steel in ships or anywhere else that has to do with the war effort. Don’t worry about how I feel about the sons going over there.”
Truman interposed to explain that Senator Brewster had a son overseas in the war.
“If a customer asks you for a strength of 60,000 pounds, the breaking point on a test,” Ferguson said, “and you give him a product of 57,000 pounds, but you represent to him in figures that you have tested it and it did test 60,000 pounds, is that a misrepresentation of a material fact?”
PERRY: Yes, sir.
FERGUSON: You understand that was done up to five percent of the material furnished?
PERRY: That is the evidence here this morning.
FERGUSON: Do you say that that was not selling a product to the United States Government under false representations?
PERRY: If that was done, to that extent it would be.
FERGUSON: You heard the testimony. Is there any doubt in your mind that it was done?
PERRY: There is a doubt in my mind as to whether it was done in regard to material that was furnished to Government specification and testing where the Government made the inspection or supervised the inspection.
FERGUSON: Do you mean to say—do I understand you now to say that you don’t believe the testimony of your own men here under oath?
PERRY: Did they actually testify to that point that where inspection was made by the Navy…?
FULTON: And also to the Navy where they said it was possible to cheat with the Navy inspector standing right there.
PERRY: I have stated that where that was done it was a misrepresentation.
FERGUSON: Do I understand that you still insist that no inferior material was sold to the Government?
PERRY: I still insist that it was not inferior for the end use to which it was put….
FERGUSON: In other words, you are the man who is stating what you think the Government should buy, is that right?
PERRY: No, sir.
FERGUSON: Then, why don’t you live up to the Government specifications?
PERRY: We should.
FERGUSON: Why didn’t you?
PERRY: We will.
TRUMAN: I’ll say you will….
The hearing lasted five hours. When the company’s attorney, testifying after Perry, talked of his need to master the technicalities of the steel business before “justifying this situation,” Truman broke in to ask what knowledge of technicalities had to do with removing cheaters from jobs of critical responsibility. “I don’t know anything about the steel business,” Truman said, “and don’t expect to know about it, but I can tell you when the books have been tampered with and when there is a bunch of crookedness going on. That is plain enough for me to see.”
But the question of who ultimately had been responsible for what went on—of how high up the blame should go—was never really answered. No one above the chief metallurgist, McGarrity, would admit to any knowledge of rigging tests or falsifying records. Nor did the hearing disclose a substantial motive for passing off the inferior steel. Those in the mill involved in the deception had nothing to gain by their actions and everything to lose if found out. The one plausible explanation offered was that it was all in an effort to set an impressive production record.
In any event management promised to set everything straight, and in the final hour the president of U.S. Steel, Benjamin F. Fairless, promised Truman that whoever was responsible would “walk the plank.”
“You realize, Mr. Fairless,” said Senator Brewster, “how incredible it seems that subordinates in the company would risk their entire future without hope of reward of any character. That, of course, is what impresses the committee and makes it so amazing.”
Senator Ferguson was curious whether Mr. Fairless thought, from what he had heard during the day, that the operation of Carnegie-Illinois Steel was an example of good management. “I certainly do not,” said Fairless. “I consider it was very, very poor management.”
At the close of the hearing, asked by a reporter for his personal comment on what had been divulged during the day, Truman said he did not think that could be printed.
On the issue of the dollar-a-year men on the War Production Board, Truman stood fast, stressing with great feeling the essential injustice of the system, but giving in at last, much against his better judgment, because the production czar he had helped create, Donald Nelson, argued otherwise. Nelson wanted no change in the system, insisting it was the way to get maximum results from industry. He had to have people who understood how industry worked, he told the committee. Asked why such men should be allowed to retain their corporate ties and benefits, he said people with big salaries had big expenses—mortgages, insurance, and the like—and could not make the change to government pay without suffering hardship.
“I don’t think there should be any special class,” Truman responded. Only that morning he had received a letter from a man who had been earning $25,000 a year, a reserve officer who had been called up for duty. “He is going to get $140 a month, and he can’t draw his $25,000 while he is gone,” Truman said. “He is satisfied to do that because he wants to win the war, just as you do and just as I do, by every means possible, no matter what it costs him, because if he doesn’t win it his $25,000 a year won’t be worth a cent. I am laboring, and have been, under the delusion, maybe, that if the government had the power to take these young men away from their jobs and their outlook on life for the purpose of this emergency, the dollar-a-year men could face the same situation and face it adequately, and would be glad to do it.”
He was not opposed to the dollar-a-year men because they were businessmen—he wanted more businessmen in government, especially in the war effort—but he knew how “human” it was for a steel executive on loan to the war administration to hesitate in ordering any action that might injure the standing of his company or industry once the war was over. He had learned that certain high-ranking dollar-a-year men had initially delayed the construction of new furnaces when they were needed because of concern over what increased ingot capacity might do to their postwar profits.
But reluctantly he backed off, saying that if Nelson felt the system was what it took to win the war, then the committee should not stand in the way. In a letter to Nelson a few days later, he was more specific. The committee did not like having procurement matters entrusted to those who were such obvious hostages to fortune, he wrote.
However, the committee believes that the best interests of the procurement program require that it be administered by a single head who will be able to do things in his way and who will be judged by his accomplishments as a whole…. The committee will, therefore, support you even on matters in which it disagrees with you….
By pushing harder on the issue, he felt, the committee could run the risk of overreaching its power, to the point of dictating policy, like the intrusive Civil War committee.
In backing Nelson he was also standing by a fundamental conviction that control of the war effort must be kept in civilian hands. In just the first six months of 1942 military contracts added to the economy totaled $400 billion. He saw ambitious generals and admirals on all sides gaining influence over industry and agriculture and he worried what this could mean for the future. In the fall of 1942, on a broadcast for “The March of Time,” he called the issue of civilian control the foremost of the day and warned
it could shape the whole political and economic structure of the country after the war. “The function of generals and admirals is to fight battles,” he said, “and to tell us what they need to fight battles with.”
General Brehon Somervell, wearing three stars now, was again called before the committee to explain an incredible project, called Canol, after “Canadian oil.” The scheme was to build a four-inch oil pipeline across 1,200 miles from Canada to Alaska, and it had been launched “on the nod” from Somervell, secretly, with little thought to the realities of terrain, climate, available materials, available manpower, or the views of oil experts, the Corps of Engineers, and the War Production Board. An item was added to the War Department budget of $25 million with no description except that it was for the construction of military facilities in Canada and Alaska.
The shroud of secrecy had been primarily to avoid interference from other civilian sides of government, and in particular the notoriously irascible Harold Ickes, Secretary of the Interior and head of the Petroleum Administration. Employees of the contractor, Stephen Bechtel, began calling Canol “the greatest project since the Panama Canal.” But then Ickes found out about it and went before the Truman Committee to say the whole project “grew entirely out of a one-page memorandum from General Somervell, who was anxious to conserve paper….” Ickes called the pipeline useless and the committee came to much the same conclusion, having heard more from Somervell’s chief adviser for the project, James H. Graham, a dollar-a-year man who, Ickes said, was “worth every penny of it.” Graham, the committee found, had no idea how long the pipeline was to be. He had made no estimate of the cost, nor did he believe anybody else had. “I don’t regard cost in time of war,” he told the committee more than once.
Truman Page 37
